Service charge dispute at hotels ends with new ‘sharing structure’

Workers to get 72 per cent of the 10 per cent service charge

Kathmandu, June 7

The long-standing dispute regarding service charge between hoteliers and trade unions of hotel and restaurant workers has finally been sorted out with a revision in ‘sharing structure’ of 10 per cent service charge being levied on customers.

Three trade unions affiliated to the major political parties namely, Nepal Tourism and Hotel Labourers Association, Nepal Independent Hotel, Casino & Restaurant Workers’ Union and All Nepal Hotel, Casino and Restaurant Workers’ Union recently inked an agreement with the Hotel Association Nepal (HAN) — the umbrella body of tourist standard hotels in the country — to increase the share of service charge for workers by four percentage points to 72 per cent.

Hoteliers and trade unions will be jointly making the agreement public through a press conference on Friday.

Meanwhile, the new sharing structure of the 10 per cent service charge has not only increased workers’ share but has also made the three trade unions its shareholders. As per the new service charge sharing structure, workers will get 72 per cent of the 10 per cent service charge and the three trade unions will get one per cent each. Of the remaining 25 per cent, hoteliers will get 23 per cent of the service charge while HAN will get two per cent.

The 10 per cent service charge on top of the listed price had been introduced in January 2007 following a bilateral agreement between HAN and the trade unions of hotel and restaurant workers, based on which workers had been getting 68 per cent share in the service charge while hoteliers and HAN had 30 per cent and two per cent shares, respectively.

However, workers of hotels and restaurants and the trade unions had been protesting since long as the 2007 agreement, which was supposed to be reviewed every three years, had not been revised until recently. In the last few years, workers had been demanding that they should get the entire service fee.

Meanwhile, the new agreement has restricted workers at hotels from activities like ‘collective bargaining’ and protests for hike in wages in such a way that adds to the financial burden of the hotel.

Similarly, the new agreement also envisions forming a task force led by the general secretary of HAN and including members of trade unions to sort out worker-employer disputes in any star hotels.

“The new agreement creates a win-win situation for both workers and hoteliers. We expect the growth of hospitality industry and enhanced relationship between hoteliers and workers following the agreement,” said Amar Man Shrestha, president of HAN.

Meanwhile, it has to be noted that the new agreement means nothing for customers as they are still obliged to pay the 10 per cent service charge. HAN and consumer rights activists had been in favour of ending such compulsory charge.